The New Zealand dollar bounced out of bed this morning but the reality of a global recession is expected to bring it back down to earth before too long.
After shedding US8 cents in a week before last night, the kiwi was looking to consolidate at the beginningof this week and overnight made steady gains up from 54.26c to 55.71c before a bounce kicked in about 7am.
The dollar rose as high as US56.35c from 55c in 90 minutes.
BNZ currency strategist Danica Hampton said a strong rebound in equity markets around the world fuelled the strong bounce in the kiwi.
A little stability return to markets last night and a strong bounce in Asian equity markets late yesterday paved the way for a recovery in European and US equities, she said.
In Japan a newspaper article suggesting a 25 basis point cut, fuelled speculation that the authorities there would take steps to stem the depreciation in the yen.
However, it was too early to say the world was a better place, she said.
Looking at the underlying data, such as terrible reports on UK retailing and French and US consumer confidence, nothing had really improved.
"Given that it has come so far so fast a bounce wasn't out of the question," Ms Hampton said.
"Worries about a global recession will continue to plague the markets."
At 8am the NZ dollar was also buying 54.78 yen, 44.56 euro and A87.93c.
The trade weighted index stood at 57.40, up from 55.13 late yesterday afternoon.
